Some interesting comments about Microsoft, Compaq, Lucent, and Intel...
> Microsoft never ceases to amaze me. The third quarter revenues were at
> $3.2 billion, up 45 percent. EPS grew at an 80 percent clip. Demand has
> exploded for Office 97 Suites, primarily due to huge growth in corporate
> intranets. Windows NT continues to win market share. Windows 95
> migration from 3.1 continues unabated. The company is obviously winning
> the war on all fronts. They continue to dominate in almost every arena
> they choose to enter and compete. What is more amazing is that deferred
> revenue increased by $272 MM and quite a few people feel that the
> company suppressed earnings just to keep numbers DOWN. The backlog
> represents about $0.50-$0.55 in additional earnings over time. Gross
> margins are at 90.7 percent! Operating margins are at 48.9 percent and
> Net margins are at 32.5 percent. DSO's are at a nominal 24 days, down
> from 33. You can't get much lower. Cash flow from operations increased
> to $1.6 billion from $1.2 billion year over year. The company
> repurchased $2 billion in stock. Management is still comfortable with a
> mid-fiscal year 1998 release for Memphis (Windows 97). Is it any wonder
> that everyone holds onto this stock?
They suppressed earnings to keep revenue numbers down. Wow.
> Compaq Computer (CPQ): Reported 1Q97 EPS of 1.36 vs. consensus of $1.31.
> EPS up 61 percent. Revenue came in at $4.8 Billion, up 14 percent, with
> gross margins of 24.5 percent, up from 21 percent. Growth was led by
> Enterprise (Servers, Workstations, Networks) sales representing 29
> percent of total, up 58 percent year over year. Operating margin came in
> at 11.6 percent. I expect higher margined high-end components will
> increase ASP but firming component prices will keep lid on gross margin
> growth. Move closer to direct channel model should help improve capital
> management. Still see PC growth at 15-20 percent next year according to
> IDC. Asset management responsible for doubling the inventory turnover to
> 12.0 and decreased DSOs to 51 from 65. They are focusing on a new
> manufacturing and delivery process that will lower costs to be passed
> onto buyers. EVA was $292 for quarter, 3X last years Q1.
This guy talks in pure bits. It's great.
> Lucent Technologies (LU): Thursday. Reported 1Q97 EPS of $0.10 vs.
> consensus of $0.08. Company numbers came in on target with earlier
> pre-announcement. No real surprises. Revenues were $5.1 Billion on gross
> margins of 42.1 percent. Operating margins were at 2.8 percent.
> Revenues up 13 percent (slightly lower than goal of 15 percent) on
> strong increases in systems for network operators (23 percent) and
> microelectronics (18 percent). Bus. Comm. Services up 14 percent. Gross
> margin up 2 percent to 42 percent due to better product mix and
> productivity improvements. Operating margin (2.8 percent) continues to
> be pressured due to implementation of SAP software. These costs will
> continue through 1998, very nebulously estimated at $50-$150MM to
> implement, but to what extent will these costs go away in 1999?
> Management doesnt know. They do expect revenues to keep growing at same
> pace in the near future as demand is strong: 2nd telephone lines, more
> contracts with RBOCs, microelectronics sales to OEMs, installation &
> maintenance in BCS. Consumer products division is becoming more
> profitable, although still remains small part of business. RBOC mergers
> are a plus for LU. Wireless contract backlog continues to stand at $4B.
> Delay in new handsets due to design modifications. LU wins 65 percent of
> CDMA contracts.
Four billion in wireless backlog contracts???
> Intel (INTC): Reported 1Q97 EPS of $2.20 vs. consensus of $2.07.
> Investors trading Intel are crazy. I still do not see structural demand
> for PC declining dramatically. I continue to see Intel making
> value-added new products to keep ASPs up and gross margins elevated. I
> fully expect that 0.18 micron technology in late 1998 will lead to new
> product cycle including P68/32-bit and 64 bit (Merced). This will keep
> them ahead of their competitors. Intel still drives pricing and K-6 does
> not change that. Demand continues to exceed supply on Pentium Pro with
> MMX. Conservative statements by the company notwithstanding, the
> company is still one of the two leading tech companies going forward.
> BUY at these levels.
Memo to Dad: don't sell Intel. Ever.
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adam@cs.caltech.edu
The way to make a small fortune in the commodities market is to start
with a large fortune.